Globus Medical, Inc. Q2 FY2025 earnings call

Management Statement and Operational Highlights

• Leadership Transition: Keith Pfeil promoted to CEO effective July 18, 2025. Dan Scavilla stepped down after 10 years with the company.
• Q2 Financials: Sales totaled $745 million, non-GAAP EPS was $0.86 (up 14.1% year-over-year). Free cash flow was $31.3 million, up 18%.
• Business Segments: U.S. Spine grew 5.7% as reported; Enabling Technologies bounced back sequentially; International Spine improved with EMEA growth; Core Trauma saw 35% growth; Neuromonitoring performed in line with expectations; Nevro integration ongoing.
• New Products: Launched DuraPro drill system, ONVOY Acetabular Shell, and Excelsius XR augmented reality headset.
• Supply Chain: Operational challenges from Q1 largely subsided, with improved product supply across the business.

Segment Performance

• U.S. Spine: Q2 sales $651 million, grew 3.3% as reported and 4.9% day adjusted. Contributed to base business growth.
• Enabling Technologies: Q2 sales $35.2 million, grew 58% sequentially but down 4% year-over-year.
• International Spine: Q2 revenue $144.6 million, grew 11% as reported, flat constant currency. EMEA region showed growth, APAC and LatAm had mixed results.
• Core Trauma: Grew 35% in Q2. NSO growing rod business declined due to supply issues.
• Neuromonitoring: Performed in line with expectations, sequential improvement.
• Nevro: Contributed $95 million in Q2 revenue. Adjusted EBITDA near breakeven.

Guidance

• Reaffirmed 2025 net sales guidance of $2.8 billion to $2.9 billion and non-GAAP EPS between $3 and $3.30.
• Confident in sustained growth in U.S. Spine and enabling technologies, with the back half of the year expected to see continued momentum.

Risks

• Tariff impacts on legacy Globus and Nevro businesses, though currently not material.
• Potential impacts of integration activities on sales if not managed properly.
• Elongated selling cycles for enabling technologies (robotic systems) remain a concern.

Question and Answer

• Q: Progress with Nevro cost and efficiency programs?

A: Keith Pfeil states the sales force is energized, cost containment activities have started, and there is a positive outlook for Nevro's future under Globus.

• Q: Enabling technologies pipeline and deal closures?

A: Keith Pfeil mentions that Q1 deals were closed in Q2, the pipeline remains elongated, robots are mostly sold outright, and the company is confident in the superiority of its robotic technology.

• Q: Investor communication strategy and Excelsius XR launch?

A: Keith Pfeil notes more investor outreach planned, including an Investor Day, and the Excelsius XR is in the quoting phase with a planned launch, integrating with the Excelsius ecosystem.

• Q: CEO transition and Nevro strategy?

A: David Paul highlights a strong leadership bench and Keith/Kyle's readiness. Nevro has differentiated neuromodulation technology, and the sales force is motivated by Globus' support.

• Q: Nevro EBITDA and accretion?

A: Kyle Kline explains that Nevro's EBITDA depends on sales performance, and SG&A focus is on achieving cost synergies for improved profitability.

• Q: Supply challenges and integration?

A: Keith Pfeil states manufacturing initiatives are ongoing, with a focus on deepening market presence in international regions to drive long-term success.